GSPA Controversy Heats Up: GEECL Sues Matix Fertilisers for Rs 100cr+ Breach

20 Jan 2024 , 09:17 AM

Great Eastern Energy Corporation Limited (GEECL), a producer of natural gas, has sued Matix Fertilisers & Chemicals Limited for more than Rs 100 crore, claiming the latter violated the provisions of the Gas Sale and Purchase Agreement (GSPA). This could be a setback for Matix, which runs the sole sizable integrated fertiliser factory in West Bengal, located in Panagarh, close to Durgapur, and asserts a 20% market share in eastern India.

In July 2017, the coal-bed methane gas producer and Matix signed a GSPA that remained in effect until August 31, 2018. It stated that Matix violated the condition pertaining to the Minimum Guarantee Offtake.

The most recent accounts notes show that GEECL had then sued Matix for Rs 148 crore, interest included. GEECL further asserted that the business owes approximately Rs 112 crore, interest included, as a result of the arbitration. It then filed an application to have the arbitration order carried out in a Rajarhat commercial court.

Matix responded by requesting a stay of the order in a Delhi High Court motion.

On January 11, the High Court declared, ‘Upon submission, the award is stayed pending the deposit of the ‘entire award amount’ and fifty percent of the interest within a fortnight.’ The funds should be placed in a fixed deposit receipt.

‘The referred matter is currently being heard in the honourable High Court, Delhi,’ a Matix representative stated to ET. The Commercial Court’s order of January 8, 2024, has likewise been stayed by the court.’

However, the representative remained silent when asked if Matix would deposit the money needed to operationalize the stay order or how much the claim amount would affect the business.

A GEECL representative stated that in order to operationalize the stay, Matix must pay around Rs 100 crore, which is made up of 50% of the interest and the entire award amount. This is in accordance with the Delhi High Court’s ruling.

‘But the execution order dated January 8, 2024, passed by the Commercial Court, Rajarhat, Kolkata, attaching Matix’s property along with bank accounts directing to leave aside a sum of Rs 112.79 crore, still holds good and not stayed,’ the spokesperson for GEECL stated to ET.

For feedback and suggestions, write to us at [e-mail]